World Regional Markets Claw Their Way Back

On the world stage in real estate, a very strong last quarter of 2010 indicated global direct investment in real estate increased once again over the 2009 margin. 2010 saw over $316 billion invested, and increase of 50 percent over the year before. Experts suggest these numbers reflect a significant recovery across several key regions, and another 25 percent increase may be indicated for 2011.

Colin Dyer CEO Jones Lang LaSalle

According to a report (PDF) by global property advisors Jones Lang LaSalle, Europe, the Middle East, and Africa recorded the highest overall volume in FDI of over $136 billion. Furthermore, Europe’s largest markets of the UK, Germany, and France made up about half that region’s volumes, but indicators show too that investors seem primed to reach out into other regions in Europe as well now. One reason for this is the limited entry for core real estate products in Europe’s traditional sectors – this is pushing in vestment monies farther East and South.

Arthur de Haast, Head of the firm’s International Capital Group had this to say about the prospects for this year:

“Barring further sovereign debt crises or financial shocks, the momentum of 2010 is expected to continue over the next 12 months and we predict global volumes for 2011 should increase by 20 to 25%.”

As an indication of the firm’s reach, and to spotlight regions where drastically increasing FDI may occur, this report (PDF) on Warsaw, Poland reveals the depth of the recovery there. The chart below illustrates the 50 percent rise in investment over the last year too. Price increases for properties, along with other factors, appear to this writer to offset the negatives of budget imbalances in Poland.

The Warsaw investment curve - courtesy Jones Lang LaSalle

Still more research shows clearly that some of the Eastern European countries have substantial growth since 2009. Turkey is maybe the best example of the a market where those placing their investment dollars seem likely to do so. The Euro zone of Turkey in particular has seen good GDP and other numbers across the spectrum from office space rental to consumer confidence, and in particular household spending.

Clearly Turkish citizens are showing far greater confidence in their own situation and the economy as a whole. The chart below shows the steady rise in GDP since the worldwide economic calamity hit. What’s more, Turkey’s budget deficit numbers go down in direct correlation to the positive rise elsewhere.

Turkey's consisten rise in GDP - Courtesy Jones Lang LaSalle

While news in the United States still hovers like a harbinger over the real estate industry, it is evident other regions have somehow emerged on a clear path toward not only solvency, but in some cases record breaking growth. As investment monies are freed up, entire economies can benefit from an influx of investment.

Jobs are created, public confidence is reinstalled, and an overall atmosphere of “building” replaces the trough of uncertainty some countries are still locked into. It seems sound advice for citizens and investors to watch these emerging regions for clues as to opportunity and ways out of this economic debacle. Maybe it’s time to look to the East?